Crude Oil Price Forecast:
- Crude oil remains trapped beneath horizontal resistance around the $41.25 mark
- Other growth-linked commodities like copper have added to recent gains as crude lingers
- Will strength in other risk sensitive assets translate to gains for crude oil?
Crude Oil Price Trapped at Resistance as Other Risk Assets Climb
Crude oil remains trapped beneath technical resistance that has kept the commodity’s price contained since early June. Meanwhile, other growth-linked commodities like copper have staged notable break outs that could allow for further gains. Outside of commodities, the highly speculative Nasdaq 100 added to its recent streak of record highs early this week, suggesting many traders are comfortable with risk exposure. With that in mind, and with repeated attacks at the $41.25 level, will crude enjoy a bullish break of its own in the coming days?
Crude Oil Price Chart: 4 – Hour Time Frame (March – July)
While it is difficult to say with certainty, it seems risk appetite in other markets may suggest the fossil fuel has the potential to break higher. To that end, a daily close above resistance will be the first requirement in establishing a longer-term move higher. If posted, such a development could open the door for a continuation above the $41.25 level as traders look to possible areas of subsequent resistance around $46.30 and $50 respectively.
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On the other hand, a failed break could see crude pull back once again, favoring further consolidation in lieu of an extension higher. Such a reversal might see the commodity test support at the 200-period moving average or subsequent support around the $35 mark. Either way, the series of higher-lows is an encouraging sign from a technical standpoint as traders become comfortable gaining exposure to crude oil at successively higher prices.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX